Question 1

Under federal securities laws, the SEC has the authority to set accounting standards in the United States.

Accepted Answer

A) True 
 B)False

Question 2

"Condorsement":

Accepted Answer

A)  Is a term used by the IASB to refer to the conditional endorsement process used by the EU with respect to IFRS.
B)  Describes a combination of convergence and endorsement that the SEC suggested the United States might use in the future to incorporate IFRS into U.S.GAAP.
C)  Was coined by a representative of the AICPA to describe the lengthy convergence process.
D)  Has nothing to do with the convergence process.E) B) and C)
F) C) and D) B

Question 3

Fundamental qualitative characteristics of accounting information are:

Accepted Answer

A)  Relevance and comparability.
B)  Comparability and consistency.
C)  Faithful representation and relevance.
D)  Neutrality and consistency.E) C) and D)
F) A) and B)

Question 4

Compute Amazon's balance in cash at the beginning of the year.

Accepted Answer

Beginning balance in Cash + Ne...

Question 5

The periodicity assumption requires that present value calculations take into account the number of compounding periods in each year.

Accepted Answer

A) True 
 B)False  False

Question 6

Land was acquired in 2013 for a future building site at a cost of $40,000. The assessed valuation for tax purposes is $27,000, a qualified appraiser placed its value at $48,000, and a recent firm offer for the land was for a cash payment of $46,000. The land should be reported in the financial statements at:

Accepted Answer

A)  $40,000.
B)  $27,000.
C)  $46,000.
D)  $48,000.E) B) and D)
F) None of the above

Question 7

Identify or define the following terms: historical cost, realization.

Accepted Answer

Historical cost-A measurement attribute ...

Question 8

The FASB is currently the public-sector organization responsible for setting accounting standards in the United States.

Accepted Answer

A) True 
 B)False  False

Question 9

Primecoat Corporation could disseminate its annual financial statements two days earlier if it shifted substantial human resources from other operations to the annual report project. Management decided the value of the earlier report was not worth the added commitment of resources. The concept demonstrated is:

Accepted Answer

A)  Timeliness.
B)  Materiality.
C)  Relevance.
D)  Cost-effectiveness.E) None of the above
F) A) and C)

Question 10

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Accepted Answer

A)  Periodicity assumption.
B)  Entity assumption.
C)  Going concern assumption.
D)  Historical cost assumption.E) B) and D)
F) B) and C)

Question 11

The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:

Accepted Answer

A)  The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the purchase method of accounting for the combination.
B)  The negative effects on subsequent earnings of amortizing goodwill if firms were required to use the pooling method of accounting for the combination.
C)  The unrealistic balance sheet assets that would be created if firms were required to use the purchase method of accounting for the combination.
D)  The unrealistic balance sheet assets that would be created if firms were required to use the pooling method of accounting for the combination.E) B) and C)
F) B) and D)

Question 12

The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.

Accepted Answer

A) True 
 B)False

Question 13

The primary historical reason for the FASB reversing its positions when political pressures occur is:

Accepted Answer

A)  The cost of gathering data was prohibitive.
B)  The difficulties in measurement were too great.
C)  They have no authority in such situations.
D)  The SEC did not support the FASB position.E) A) and B)
F) A) and C)

Question 14

When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?

Accepted Answer

A)  Verifiability.
B)  Predictive value.
C)  Faithful representation.
D)  Timeliness.E) A) and D)
F) A) and C)

Question 15

GAAP is an abbreviation for:

Accepted Answer

A)  Generally authorized accounting procedures.
B)  Generally applied accounting procedures.
C)  Generally accepted auditing practices.
D)  Generally accepted accounting principles.E) All of the above
F) C) and D)

Question 16

Accounting standard setting has been characterized as:

Accepted Answer

A)  A political process.
B)  Using the scientific method.
C)  Pure deductive reasoning.
D)  Pure inductive reasoning.E) B) and C)
F) None of the above

Question 17

According to the FASB's Statements of Financial Accounting Concepts, conservatism is a desired qualitative characteristic of accounting information.

Accepted Answer

A) True 
 B)False

Question 18

A firm's comprehensive income always:

Accepted Answer

A)  Is the same as its net income.
B)  Is greater than its net income.
C)  Is less than its net income.
D)  Could be greater than or less than net income.E) C) and D)
F) A) and B)

Question 19

If a company has declared bankruptcy, its financial statements likely violate:

Accepted Answer

A)  The matching principle.
B)  The realization principle.
C)  The stable monetary unit assumption.
D)  The going concern assumption.E) B) and C)
F) None of the above

Question 20

A cause-and-effect relationship is implicit in the:

Accepted Answer

A)  Realization principle.
B)  Historical cost principle.
C)  Matching principle.
D)  Going concern assumption.E) B) and C)
F) A) and D)

Exam 1: Environment and Theoretical Structure of Financial Accounting

Under federal securities laws, the SEC has the authority to set accounting standards in the United States.

Correct Answer
verified

"Condorsement":

Correct Answer
verified
B

Fundamental qualitative characteristics of accounting information are:

Correct Answer
verified

Compute Amazon's balance in cash at the beginning of the year.

Correct Answer
verified
Beginning balance in Cash + Ne...
View Answer

The periodicity assumption requires that present value calculations take into account the number of compounding periods in each year.

Correct Answer
verified
False

Correct Answer
verified

Identify or define the following terms: historical cost, realization.

Correct Answer
verified
Historical cost-A measurement attribute ...
View Answer

The FASB is currently the public-sector organization responsible for setting accounting standards in the United States.

Correct Answer
verified
False

Correct Answer
verified

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Correct Answer
verified

The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:

Correct Answer
verified

The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.

Correct Answer
verified

The primary historical reason for the FASB reversing its positions when political pressures occur is:

Correct Answer
verified

When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?

Correct Answer
verified

GAAP is an abbreviation for:

Correct Answer
verified

Accounting standard setting has been characterized as:

Correct Answer
verified

According to the FASB's Statements of Financial Accounting Concepts, conservatism is a desired qualitative characteristic of accounting information.

Correct Answer
verified

A firm's comprehensive income always:

Correct Answer
verified

If a company has declared bankruptcy, its financial statements likely violate:

Correct Answer
verified

A cause-and-effect relationship is implicit in the:

Correct Answer
verified

Exam 1: Environment and Theoretical Structure of Financial Accounting

Under federal securities laws, the SEC has the authority to set accounting standards in the United States.

Correct AnswerverifiedShow Answer

"Condorsement":

Correct AnswerverifiedB

Fundamental qualitative characteristics of accounting information are:

Correct AnswerverifiedShow Answer

Compute Amazon's balance in cash at the beginning of the year.

Correct AnswerverifiedBeginning balance in Cash + Ne...View AnswerShow Answer

The periodicity assumption requires that present value calculations take into account the number of compounding periods in each year.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

Identify or define the following terms: historical cost, realization.

Correct AnswerverifiedHistorical cost-A measurement attribute ...View AnswerShow Answer

The FASB is currently the public-sector organization responsible for setting accounting standards in the United States.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

The assumption that in the absence of contrary information a business entity will continue indefinitely is the:

Correct AnswerverifiedShow Answer

The most political issue in the FASB's most recent deliberations and amendments to GAAP on business combinations was:

Correct AnswerverifiedShow Answer

The primary function of financial accounting is to provide relevant financial information to parties external to business enterprises.

Correct AnswerverifiedShow Answer

The primary historical reason for the FASB reversing its positions when political pressures occur is:

Correct AnswerverifiedShow Answer

When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?

Correct AnswerverifiedShow Answer

GAAP is an abbreviation for:

Correct AnswerverifiedShow Answer

Accounting standard setting has been characterized as:

Correct AnswerverifiedShow Answer

According to the FASB's Statements of Financial Accounting Concepts, conservatism is a desired qualitative characteristic of accounting information.

Correct AnswerverifiedShow Answer

A firm's comprehensive income always:

Correct AnswerverifiedShow Answer

If a company has declared bankruptcy, its financial statements likely violate:

Correct AnswerverifiedShow Answer

A cause-and-effect relationship is implicit in the:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Beginning balance in Cash + Ne...
View Answer

Correct Answer
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False

Correct Answer
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Correct Answer
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Historical cost-A measurement attribute ...
View Answer

Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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